US DATA: Philly Fed Mfg Current Inflation Eases In June But Expectations Climb
The price details of the Philly Fed manufacturing survey for June showed a pullback from elevated rates for both prices paid and prices received in the current period. Six-month ahead expectations for prices paid pushed higher again though, and at 68.9 is getting closer to the high of 77.8 from Jan 2022, although prices received isn’t quite as relatively elevated.
- Current period prices paid eased to 41.4 in June (lowest since Feb) after a particularly elevated 59.8 in May (highest since Jun 2022).
- Notably, current period prices received also pulled back to 29.5 (lowest since Dec) from 43.6 in May (highest since Jun 2022) rather than showing any sign of inertia.
- These readings are still elevated, comparing with an average 19.7 for prices paid in 2019 and 16.5 for prices received, but at least pressures have abated.
- Expectations continued to increase however, with the six-month ahead for prices paid rising a further +7.3pts to 68.9 (highest since Jan 2022), although this didn’t translate as strongly into prices received, +2.5pts to 52.5 off April’s 67.7.
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PIPELINE: Corporate Bond Update: $2B Turkiye 7Y Launched
- Date $MM Issuer (Priced *, Launch #)
- 05/20 $4B *ADB 5Y SOFR+42
- 05/21 $2B #Turkiye 7Y 7.45%
- 05/21 $1.5B OKB 3Y +34
- 05/21 $1.25B *Kommunalbanken +5Y SOFR+49
- 05/21 $1B Finnvera WNG 5Y SOFR+53a
- 05/21 $Benchmark Citibank 2Y +58, 2Y SOFR, 5Y +78, 5Y SOFR
- 05/21 $Benchmark Northwestern Mutual Life 30Y +135a
- 05/21 $Benchmark BPCE 6NC5 +150a, 11NC10 +175a
UK: Starmer U-Turns On Winter Fuel Payments As Pressure From Left & Reform Grows
Prime Minister Sir Keir Starmer has confirmed that the number of pensioners who receive the winter fuel payment will be widened amid growing discontent among left-wing backbenchers in his Labour party. While the PM did not outline the details of the change, saying these would come in the autumn budget, the clear shift in policy comes as his party struggles with declining opinion polling numbers on the back of a poor return in the 1 May local elections and a parliamentary by-election defeat in a previously safe seat on the same day.
- Some Labour figures have said that the winter fuel payment cut was brought up consistently on the doorstep during the local election campaign, contributing to the party's poor performance. MPs and ministers on the left of the party are also said to be concerned that the gov't is drifting too far to the right, particularly on social issues in the wake of Starmer's announcements on immigration reform earlier in the month.
- While Starmer's sizeable majority continues to insulate the gov't from rebellions that could defeat legislation, the PM will be wary of alienating the left and soft left of the party just a year into his five-year term. It remains to be seen if further policy U-turns, or concessions to the left on taxes, come into play as the budget approaches.
- Pressure on the gov't is highlighted in opinion polling, where the right-wing populist Reform UK has led or held a joint lead in every nationwide poll since 14 April. Taking a hard line on immigration, Reform UK's economic policy is more left-wing nationalist, backing nationalisation of previously privatised assets (such as British Steel), and advocating for a more substantial welfare net (particularly for pensioners).
Chart 1. General Election Opinion Polling, % and 4-Poll Moving Average
Source: YouGov, More in Common, Opinium, Techne, Find Out Now, Freshwater Strategy, BMG, Survation, Lord Ashcroft Polling, Focaldata, JL Partners, Whitestone Insight, Deltapoll, Stonehaven, We Think, MNI
STIR: SOFR Options
- -16,000 SFRM5 95.75 calls, 1.25 vs. 95.68/0.10%
- +20,000 SFRM5 96.50 calls, 0.5 ref 95.6825
